Boulder County solar industry decries Xcel's plan to slash incentives

Mark Schaefer, with Independent Power Systems, tightens bolts on a 4.8 kilowatt solar array on a home in Boulder, Colorado February 16, 2011. CAMERA/Mark Leffingwell (MARK LEFFINGWELL)

Xcel Energy plans to slash its solar incentive program by nearly 50 percent, the Colorado utility announced Wednesday in a move that Boulder County companies say will devastate the local solar industry.

Currently, customers who install small solar arrays on their properties receive two types of incentives from Xcel's Solar Rewards program: a rebate worth $2 per watt and a "renewable energy credit" payment of $0.35 per watt.

Xcel said Wednesday that, effective immediately, the combined incentive for new solar installations would decrease from $2.35 to $2.01 per watt. The company also filed paperwork with the Colorado Public Utilities Commission on Wednesday that, if approved, would further drop the combined incentive to $1.25 per watt.

Members of the Colorado solar industry say the deep and sudden cuts to the incentive program could be ruinous.

"In one move, Xcel would slash the incentives to such a degree that it would fundamentally destabilize the marketplace," said Neal Lurie, executive director of the Boulder-based Colorado Solar Energy Industries Association. "They are nuking small businesses."

Xcel said the deep cuts were prompted by the decreasing cost of solar panels and the increasing number of government subsidies available for solar installations, such as the federal tax credit worth 30 percent of the system's cost.

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"We established Solar Rewards to stimulate interest in installing solar systems on homes and businesses, and to make sure the technology is part of Colorado's energy mix," said David Eves, president and CEO of Xcel's Colorado operations, in a news release. "The program has been successful in doing that."

Xcel already has a plan in place to ratchet down its Solar Rewards program over time -- a strategy that many local companies were on board with. But now Xcel wants to scrap that plan in response to the solar industry's quick pace of growth.

"It grew faster and became more stable at a quicker pace than we had anticipated with the ratcheting down (plan)," Xcel spokeswoman Michelle Aguayo said.

Last week, the Colorado Solar Energy Industries Association held its annual conference in Loveland, which attracted businesses from all over the country and as far away as China that were interested in investing in Colorado's solar industry, Lurie said.

"Xcel's move is putting that investment in Colorado at risk and putting all the gains in Colorado's new energy economy in jeopardy," he said.

Blake Jones, president and chief executive officer of Namaste Solar in Boulder, agrees with Lurie's dire assessment of the impacts associated with Xcel's plan.

These cuts "would effectively kill Colorado's solar market, and along with it, hundreds of solar companies like Namaste Solar and thousands of jobs," he said. "This is our worst nightmare come true."

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